UK Gambling PLCs take centre stage on Budget week

UK gambling will be at the forefront of global business headlines and further M&A speculation this week as its ‘big-three’ PLCs declare their end-of-year results having navigated the events of an unprecedented 2020.   

Opening the FTSE bell on Tuesday 2 February, Flutter Entertainment will publish its 2020 financial results, with City and Wall Street eyes eager to gauge the firm’s ongoing progress within the US market.

Though COVID circumstances denied Flutter its first-year honeymoon integrating the Sky Bet and PokerStars assets of its merger with The Stars Group Inc, the FTSE100 share price remains unscarred and carries long-term investor confidence – up 70% over 2020 trading.

Mitigating UK retail headwinds should help Flutter deliver positive 2020 results with solid US growth. The FTS100 firm will maintain its ‘Tesla type share price trajectory’ – a statement held by renowned gambling investor Jason Ader – founder of New York investment fund SpringOwl, who branded Flutter as gambling’s only unicorn firm.

Gambling PLC results will be published against the backdrop of Chancellor Rishi Sunak announcing the UK’s 2021 Budget on Wednesday lunchtime.

The HM Treasury’s tax strategy takes centre stage as the UK government faces the reality of plugging a £300 billion deficit – running 10 times greater than Chancellor Sunak’s original £30 billion economic relief measures announced during last year’s budget.

Despite party opposition, Sunak has signalled that he is prepared to raise corporate taxes as a temporary measure in order to ensure that UK emergency services are properly funded to see out the UK’s vaccine program.

Facing critical choices, the Sunday Times reported last month that HM Treasury strategists had drafted a ‘unique charge’, introducing a ‘digital sales tax’ on companies that had ‘cashed-in during the pandemic’.

The one-off measure directly mentioned US tech giant Amazon, which recorded a 51% increase in UK online sales to £20 billion recorded during 2020 – and advised the Treasury to implement the charge across all digital sectors.

Last Friday, Betting and Gaming (BGC) Chief Executive Michael Dugher wrote to Sunak urging the Treasury to extend business rates relief for leisure and hospitality venues. Stating that UK gambling was in need of ‘a period of stability and certainty, the BGC has warned the Treasury against any tax increases to plug COVID holes.

Wednesday’s Budget announcement will be followed by the back-to-back  PLc results of Entain and William Hill.

Entain is set to calm investors by announcing higher revenues after a turbulent start to 2021, which included a snubbed £8 billion takeover by its US strategic partner MGM Resorts and the departure of Shay Segev as Group CEO. 

Industry eyes will focus on the first public statement of Entain’s new CEO Jette Nygaard-Andersen, who will likely have to rebuff analysts acute probing MGM’s pursuit of Entain.

As FTSE gambling’s first female CEO, Nygaard-Andersen should expect no courtesy with regards to a deal once branded as a ‘guaranteed arranged marriage’.

Whilst Entain continues its US flirt, Thursday will likely be the last FTSE announcement made by William Hill as a UK business entity. Paying $3.8 billion, a recapitalised Caesars Entertainment acquired William Hill to close 2020 trading – a deal to lead its state-by-state assault on US wagering.  

Vultures will be circling William Hill’s final PLC announcement, as the heritage betting group discloses further information on how it will divest its UK retail and digital assets, alongside further European properties – as it becomes a full US native.

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